CONFIDENTIAL AC110/120/JULY2021 /MAF201

UNIVERSITI TEKNOLOGI MARA

TEST 2

COURSE : COST AND MANAGEMENT ACCOUNTING 1

COURSE CODE : MAF201
EXAMINATION : JULY 2021
TIME : 2 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of TWO (2) questions.

2. Answer ALL questions.

3. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This assessment paper consists of 3 printed pages

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 CONFIDENTIAL 2 AC110/120/JULY2021/MAF201

QUESTION 1

Fitness Sdn Bhd operates a shoes store that sell casual men’s shoes with identical unit costs
and selling price. A unit is defined as a pair of shoes. The outlet has 5 store assistants who
are paid fixed monthly salary and salesmen, who each receive a fixed monthly salary and
sales commission. The current yearly production and sales for the shoes are 8,000units. The
following data consist of costs incurred during the year ended 2020:

RM
Selling Price 130.00

Variable cost of shoes 50.00

(40% direct material, 20% direct labour and 40% manufacturing overhead)
Salesmen commission 20.00

Annual Fixed Costs RM

Rent 60,000
Salaries 200,000
Advertising 80,000
Other fixed costs 20,000
Depreciation on equipment 6,000

Required:
a. Identify the costs in year 2020 into:
i. Total variable costs per unit
ii. Total fixed costs

b. Evaluate the following in year 2020:

i. Break-even point in units and value
ii. Margin of safety in units and value
iii. Total net profit earned for 2020
Iv. The expected sales units to achieve the target profit of RM250,000 for next year
given that the total variable manufacturing overhead per unit is expected to increase
by 10 percent.

(11 marks)

c. Recently, the company is considering opening a new outlet to produce and sales a
new and limited edition of trail running shoe. Fitness Sdn Bhd has estimated that the variable
costs would amount to RM80 per shoes and it can be sold at RM180. In order to promote its
new product, Fitness Sdn Bhd are expected to increase the advertising costs by RM20,000.
Other costs are estimated to remain constant and to be shared by both products. The sales of
new trailing run shoes are expected to be 8,000 units per annum.

Advise whether the company should proceed with the plan based on the new company’s
Break-even point in units.

(7 marks)
(18 marks)

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 CONFIDENTIAL 3 AC110/120/JULY2021/MAF201

TRUE/FALSE QUESTIONS (2 MARKS)

1. A cost that remains unchanged in total within a relevant range of operations, yet
decreases per unit of product as production accelerates, is known as a variable cost.
(1 mark)

2. One of the assumptions for cost-volume-profit analysis is that the selling price per unit
remains unchanged for all units sold during the planning period.
(1 mark)
(Total: 20 marks)

QUESTION 2

Sapura Sdn Bhd prepares monthly cash budgets. Relevant data from operating budgets for
2020 are:

Particulars January February

Sales RM350,000 RM400,000
Direct materials purchases RM110,000 RM120,000
Direct labor RM85,000 RM115,000
Manufacturing overhead RM60,000 RM75,000
Selling and administrative expenses RM75,000 RM80,000

All sales are on credit terms. Collections are expected to be 60% in the month of sales, 25%
in the first month following the sales, and the balance the month after.

Payment of materials purchases will be made in two installments. Thirty per cent (30%) of
direct materials purchases are paid in cash in the month of purchases, and the balance due
is paid in the month after purchases.

All other items above are paid in the month incurred. Depreciation has been excluded from
manufacturing overhead and selling and administrative expenses.

Additional information:
1. Credit sales: November 2019, RM 200,000; December 2019, RM 290,000.

2. Purchases of direct materials: December 2019, RM 90,000.

3. Other receipts: January 2020 - interest receivable RM 3,000; February 2020 - proceeds
from sale of securities RM 5,000.

4. Other disbursements: February 2020 - payment of RM 20,000 for purchase of land.

The company’s cash balance on January 1, 2020, is expected to be RM 50,000.

Required:
a. Prepare the monthly cash budget of Sapura Sdn Bhd for the month of January and
February 2020.
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 CONFIDENTIAL 4 AC110/120/JULY2021/MAF201

(16 marks)

MULTIPLE CHOICE QUESTIONS (4 MARKS)

1. When a production budget is being prepared the quantity that needs to be produced is
calculated by the following equation:
A. Quantity sold plus closing stock less opening stock
B. Opening stock plus quantity sold plus closing stock
C. Opening stock less quantity sold plus closing stock
D. Opening stock less quantity sold
(1 mark)

2. Which of the following will not appear in a cash budget?

A. Depreciation of machinery
B. Sales revenue
C. Wages
D. Machinery bought on hire purchase
(1 mark)
3. A sales budget is:

A. Derived from the production budget.

B. Management’s best estimate of sales revenue for the year.
C. Not the starting point for the master budget.
D. Prepared only for credit sales.
(1 mark)

4. Which of the following is not a functional/operational budget?

A. Labour budget
B. Cash budget
C. Materials budget
D. Production cost budget
(1 mark)

(Total:20 marks)

END OF QUESTION PAPER

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